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Government to Lower Loan Limit

Mortgage News > Government to Lower Loan Limit
Date: 09/27/2011    Government to Lower Loan Limit

The government announced starting Saturday the national loan limit will fall.  Currently homeowners are able to borrower up to $729,750 before having to apply for a “jumbo loan”.  After Saturday the maximum loan amount will be $625,500.

Chief economist at the Mortgage Bankers Association (MBA) Jay Brinkmann suggests borrowers looking at loans from the Federal Housing Agency (FHA) will be most impacted by such a change due to the fact that for many of them FHA loans are the only loans they qualify for.  The FHA permits down payments as low as 3.5%.

The new loan limit is not expected to affect too many borrowers in the grand scheme of things.  A study released by the Federal Reserve last week found that only 1.3% of purchase or refinance loans backed by Fannie Mae and Freddie Mac would have been adversely affected by lower loan limits had they been in place last year.